HEC Research Papers Series,
HEC Paris

Abstract: In a game with rational expectations individuals refine their information with the information revealed by the strategies of other individuals: their elementary acts of other individuals at each state of the world. At a Nash of a game with rational expectations, the information of individuals is essentially symmetric; the same profile is also an equilibrium of a game with symmetric information and their acts are common knowledge. If each player has a veto act, which yields a minimum payoff that no other profile of strategies attains, then the veto profile is the only Nash equilibrium, and it is an equilibrium with rational expectations and essentially symmetric information, which accounts for the impossibility of speculation.

Keywords: Nash equilibrium; rational expectations; common knowledge

JEL-codes: D82

13 pages, January 1, 2000

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